The Role of Metaphor Frequency and Complexity in ICO Fundraising under Informational and Contextual Constraints

Details

Supervisors

Thewissen, James

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

enIn this thesis, the use of metaphorical language in ICO fundraising is explored. The attention is placed on white papers as the main communication tool between the issuers and potential investors. Prior research has demonstrated that financial communication can mitigate information asymmetry and alter investor perception, but the use of metaphors in fundraising circumstances has not been well studied. Therefore, this study analyses if the frequency of metaphors and the semantic complexity of metaphors in ICO white papers are related to the fundraising performance assessed by the Winsorised amount raised. It also explores the moderating role of regional financial literacy in this connection. The empirical analysis uses a cleansed database of 429 ICOs, and the final OLS model is estimated on 393 observations. The model adjusts for project-level, financial, textual and market-related factors, year and industry-category fixed effects and uses HC1 robust standard errors. The results do not provide statistically solid evidence of a substantial effect of metaphor frequency or metaphor complexity on ICO fundraising performance. Regional financial literacy also does not significantly modify the association between metaphorical language and amount raised. The data, however, show that the success of fundraising is more connected with the quality of communication, signals of legitimacy, market conditions and more general textual features. Overall, this argument suggests that metaphors can still contribute to financial communication, but their effect seems to be subtler, contextual and harder to isolate than a straight positive association between metaphor use and fundraising success.